Korean insurer quits Myanmar as investor patience runs dry

South Korea`s largest insurance company has left Myanmar as business patience over the government`s delay in liberalising the insurance market is in short supply.

Samsung Life Insurance, a subsidiary of Samsung Group, ceased operating in Myanmar last August, a representative of the Myanmar Korean Chamber of Commerce and Industry (MKCCI) confirmed with The Myanmar Times.

The Seoul-based multinational insurer, with a presence and joint ventures in Thailand, China, the US, Japan, the UK and Vietnam, opened its Yangon representative office in November 2013, according to the representative.

The finance ministry committed to liberalising the insurance sector within the first quarter of 2017, but has hitherto failed to make any concrete moves. Foreign insurers from 14 countries who have set up 30 representative offices still cannot do business in Myanmar, except in Thilawa Special Economic Zone.

"Samsung Life Insurance waited for the opening of the insurance market in Myanmar while reviewing the feasibility of the insurance business for more than two years, but withdrew after the full opening of the insurance market was delayed," Lee Keun Jae, secretary general of MKCCI, said.

"Myanmar`s domestic [insurance] operations were limited, and Myanmar`s full-fledged opening of the insurance market had to wait for more years [to come]. We do not know what the Myanmar government promised Samsung Life."

"If foreign good insurance companies expand their sales assets through its operations and re-invest their assets in Myanmar`s long-term infrastructure projects, it will contribute to Myanmar`s economic development," he added.

The Korean business leader urged Nay Pyi Taw not to focus on attracting new investors abroad at the expense of those who already established a presence in the country. He said foreign financial institutions should have been able to at least start operations by now.

Just as the National League for Democracy-led government is pivoting to Asian companies for investments and support, the East Asian business community is increasingly vocal over the need for the government to deliver on its insurance reform.

Late last year, chair of Japan Chamber of Commerce and Industry in Myanmar (JCCM) Kunio Negishi said such a delay "discourages businesses".

"I hope the Myanmar government will soon decide to open up the market, after which Japanese insurance firms have a range of insurance products which will help the healthy growth of Myanmar`s economy," he said at the time.

For Nishant Choudhary, co-chair of EuroCham`s legal group, the withdrawal of the Korean firm "does not send a right message" about Myanmar to investors, both onshore and offshore. There was an expectation of, at least, ownership of minority stake - up to 35 percent - in insurance companies.

"The Samsung Life`s pull out, if it is due to regulatory hurdles and not a commercial one, would certainly not be welcoming," he said. "The optimism after coming into force of the new Companies Law may not be sufficient to attract foreign investments if further ironing-out of policy impediments is not achieved."

The government recently made another pledge to deliver on its promise by April this year.

On December 12, U Thant Sin, director of the finance ministry`s Financial Regulatory Department, said the department will give licences to foreign insurers "within the next 16 weeks". The government will "soon invite Expressions of Interest [EOI]" and foreign players can "start operations in April or no later than May."

Meanwhile, the Insurance Business Regulatory Board (IBRD) issued a Directive on November 23 instructing all existing insurance companies to restructure their operations and permits in preparation of the liberalisation.

Alex Bohusch, another co-chair of the legal group, expects the opening of the sector "in the near future" after delays resulting from the IBRD`s decision to grant existing providers additional time to prepare for the admission of foreign players.

"Provided that the liberalisation is not delayed unreasonably, the regulator`s careful, methodical approach should facilitate a faster implementation of the upcoming reform, which will benefit both local and foreign investors and shows that the authorities have learned from past mistakes," Mr Bohusch commented.